- Trump would impose 25% tariffs on Canada and Mexico
- Fed left rates in a range of 4.25-4.50
- DeepSeek shakes up markets and Nvidia
- Senate confirms Scott Bessent to be US Treasury Secretary
- Texas aims for its Bitcoin reserve
With Donald Trump’s arrival, every week is a very busy one regarding government regulations, technological advances, and market reactions, so let’s break them down.
Another Round of Regulations
Last week began with Donald Trump’s earlier promise of 25% tariffs on goods from major neighboring trading partners, and the first was Colombia. More specifically, it was a reaction to Trump’s other initiatives to deport illegal migrants, which the Colombian government agreed to.
However, the first planes sent had to be turned back because the Colombian president withdrew his consent, to which the White House responded unequivocally.
“The Government of Colombia has agreed to all of President Trump’s terms, including the unrestricted acceptance of all illegal aliens from Colombia returned from the United States, including on U.S. military aircraft, without limitation or delay. Based on this agreement, the fully drafted IEEPA tariffs and sanctions will be held in reserve, and not signed, unless Colombia fails to honor this agreement. The visa sanctions issued by the State Department, and enhanced inspections from Customs and Border Protection, will remain in effect until the first planeload of Colombian deportees is successfully returned.”
In turn, Donald Trump reacted even more directly and imposed 25% on goods in the US, and threatened to raise this to 50% if Colombia did not follow a previously established agreement.
The Colombian President ordered retaliatory tariffs, but by now the situation has been resolved and Colombia has agreed to accept the migrants as long as they are not transferred by military aircraft.
A similar situation with Canada and Mexico later in the week, where Trump promised to give a final decision this Saturday. As we now know, he has signed an executive order imposing these tariffs.
Canadian Prime Minister Justin Trudeau responded:
“We’re ready with a response – a purposeful, forceful but reasonable, immediate response. It’s not what we want, but if he moves forward, we will also act. I won’t sugarcoat it – our nation could be facing difficult times in the coming days and weeks. I know Canadians might be anxious and worried, but I want them to know the federal government, and indeed, all orders of government, have their backs.”
Mexican President Claudia Sheinbaum also responded:
“We will always defend the dignity of our people, respect for our sovereignty, and a dialogue as equals without subordination. We will wait, as I have always said, with a cool head, when taking decisions. We are prepared and we maintain this dialogue.”
Another highly important but relatively predictable development was that the Fed decided to hold interest rates despite Trump’s guidance.
Among many reasons for such a decision, we are still above the inflation target of 2%. Despite the Fed having done a good job of hitting the 2% inflation target, it remains around 3%, and even more, it rose from 2.6 to 2.8 in December. Also, earlier fears that if Trump were to make sharp economic decisions, it could unleash inflation. And as we can see, Trump’s decisions back in the first week have been very sharp indeed and may have unpredictable long-term effects with many variables.
All of this triggered swings in the markets and we saw key indices show notable declines, although not the most dramatic we have seen this week.
Particularly, the broad market index fell 0.47% to close at 6,039.31, while the Nasdaq Composite lost 0.51% to end at 19,632.32, and the Dow Jones Industrial Average shed 136.83 points, or 0.31%, to 44,713.52.
Technology Breakthroughs
The most high-profile event of the week was the release of the Chinese AI model DeepSeek, so even Trump commented on it:
“The release of DeepSeek AI from a Chinese company should be a wake-up call for our industries that we need to be laser-focused on competing.
The important factor here is not so much the quality of this model, as the flashy benchmark results are being analyzed and an investigation into potential data theft from OpenAI is underway.
David Sacks, AI and crypto tsar said:
“There’s substantial evidence that what DeepSeek did here is they distilled knowledge out of OpenAI models.”
But rather how much it really cost to create this model, and as DeepSeek Labs claims $6M. Already this figure is being questioned, as it doesn’t include a number of factors like developer pay and more. But still, Trump found this as an optimistic sign:
“Very much a positive development. Instead of spending billions and billions, you’ll spend less, and you’ll come up with, hopefully, the same solution.”
Still, this has really shaken up the markets and has reignited the already pressing question of return on investment in the AI sector. Nvidia experienced a new record drop of 17%, which cost the market ~$600B loss.
In addition, news has also emerged regarding the ongoing case surrounding TickTock, where Trump had previously asked for the blocking to be pushed back to give him time to look into the matter.
Earlier, there was a rumor that TikTok might be acquired by Elon Musk, but this did not get any confirmation. Now, however, Trump has admitted that it is likely Microsoft could acquire it.
Crypto Initiatives of the Last Week
This week also includes crypto initiatives, albeit not as fundamental as the last one. First of all, it is important to note that the Senate Confirmed Scott Bessent to be the US Treasury Secretary, and this is probably a strategic move to create a Bitcoin reserve.
Also, some states are making autonomous efforts to their own Bitcoin reserve, such as Texas showed. In addition the fact that Texas Senator Charles Schwertner has filed SB 778 – Lieutenant Governor Dan Patrick has announced 40 priority bills for 2025.
We can also see how along with pro-crypto regulation with the US – outside of it the world seems to be moving similarly. Purpose Investments is taking steps to introduce the world’s first XRP ETF and filed a preliminary prospectus with the Canadian regulating body, signaling its intention to create the first exchange-traded fund for the world’s third-largest cryptocurrency asset.
Conclusion
Beyond any doubt, Donald Trump has accelerated all the stale processes and has made it challenging for many to predict his next move.
It is also worth mentioning that the changes we are seeing now seem to be of a fundamental nature, and potentially affect such a large mass of things.
It is very important not to lose sight of all important events, key markets, and the crypto industry as one of the fastest-growing industries right now.
Be aware and stay tuned.
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